Cryptocurrency Analysis: Technical Report

Abstract

The purpose of this project is to perform an analysis on the comments by users on cryptocurrency discussion platforms and the prices of the mentioned cryptocurrencies. Although the blockchain has been around close to 10 years, cryptocurrencies are still a relatively young market. Bitcoin which has the first mover advantage has always been a dominating force within the sphere, but within the last year the market has seen a huge increase in interest. One year ago, the entire market capitalization of all cryptocurrencies was $13 billion and bitcoin held a dominance of 88% with a market cap of $11.5 billion. Compare that to today and all cryptocurrencies have a market cap of $310 billion with bitcoin only having a 54% dominance. The entire sphere has seen growth of more than 2284% in less than a year and bitcoin is beginning to lose a lot of its market share to newer more promising currencies. Unlike traditional stocks, cryptocurrencies have no tangible value attached and prices fluctuate with perceived value. Cryptocurrency trading relies on speculation more so than fundamental analysis and as a result most of the price speculation takes place online. Due to the abundance of data regarding speculation around prices on various cryptocurrency discussion platforms, I hope to find a correlation between the sentiment of the posts and the prices of the mentioned cryptocurrencies. This project will follow the KDD methodology.